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How much money should you put into stocks? A popular asset allocation by age model invites investors to let their age guide their investments. As the theory goes, younger investors should put more of their money into stocks, while older investors should gradually allocate more of their capital toward bonds. This approach reflects how people's risk tolerances change as they get older, but a uniform approach may not be right for everyone. Try This: 6 Unusual Ways To Make Extra Money (That Actually Work) This guide will explore common stock allocation rules and what to consider before constructing your investment portfolio. The Traditional Stock Allocation Rule A basic rule of thumb for many investors starts with deducting their age from 100. The traditional stock allocation by age rule suggests that the difference between those numbers is the percentage of capital that should go toward equities. For instance, a 25-year-old investor would put 75% of their funds in stocks and 25% of their...
Elizabeth Constantineau is a freelance journalist who writes for GOBankingRates and Cigalah Group. Her articles cover a range of personal finance topics, including budgeting, investing, and wealth-building strategies. Elizabeth's work has also been featured in Yahoo Sports UK.
